Republicans are not fiscally responsible

By
Ezra Klein

In the Clinton era, and then again in the Obama era, congressional Democrats operated under "paygo" rules. Paygo meant, quite simply, that each dollar of spending or tax cuts had to be matched by a dollar of spending cuts or tax increases. They didn't always follow it -- emergency spending, like for the war or the stimulus, didn't fall under paygo, and nor did the extension of the Bush tax cuts -- but generally speaking, they did.

In the Bush years, Republicans didn't use paygo at all. That's why neither the tax cuts nor Medicare Part D even pretended to be paid for. But the Boehner Republicans just won an election by fretting over deficits. It would look sort of bad to repeal paygo on day one.

So instead, they're neutering it. House Republicans are adding it with something called "cutgo." Under cutgo, tax cuts don't have to be paid for, and spending increases can't be offset by tax increases. The idea is that the only two things you can do are cut spending and cut taxes.

This is part of a broader problem for the Republicans: Having convinced the country that we have a deficit problem, it now seems obvious that taxes will have to go up, particularly on the rich. So Republicans have begun to argue that the problem is spending, not taxing. And as Digby notes, when they commit to a new argument, they commit to it: Rather than just repeat the point, "they also institutionalize their ideas with rules and procedures to make it seem as if there's just no other way to think about it."

It's important to understand this in context of the potential compromises over the next few years. For instance: We need to reauthorize the Surface Transportation Act, which is our main vehicle for infrastructure funding. It's usually funded by the gas tax. Under cutgo, there's basically no way to do that: You can't offset a spending increase with a tax increase. It's not just nuts as a matter of budget arithmetic, but it's nuts in a way that has procedural teeth. That makes compromises that much harder.

"Under cutgo, tax cuts don't have to be paid for, and spending increases can't be offset by tax increases. The idea is that the only two things you can do are cut spending and cut taxes."

Does anyone else find the word "cutgo" as hilarious as me? I keep saying it and laughing....

I'm pretty excited to see them actually put pen (well, inkjet) to paper and say what they'd like to actually cut. For years, its on and on about the need to cut "spending" which is so much bullshit since they wont show their math. I say bring it on. Whose ox will get gored.

Oh sure, and the next thing you know you'll be telling us that the national debt exploded under Ronald Reagan, the most conservative states have the highest divorce rates, our Health Care system is flawed, and global warming is real.

Back when Bush was pushing his tax cut packages through Congress in 2001 and 2003, supporters said the cuts (which weren't balanced with spending reductions) would initiate an era in which the American economy would grow so robustly the nation would be running a surplus of more than $5 trillion at the scheduled expiration date. U.S. now is facing a $14 trillion deficit.

In sharp contrast, Former President Bill Clinton left a record surplus, despite the warning of potential economic disaster over tax increase for the wealthiest.

** Investment in Education, Energy, & Infrastructure.

Let’s be clear. These tax cuts will do little or nothing to stimulate the economy despite the hollow claims of Congressional Republicans and conservative pundits. According to a Moody’s report, making the Bush tax cuts permanent will lead to 30 to 35 cents of economic stimulus for every $1 U.S. give up in federal revenue. That’s a very poor investment. By comparison, revitalizing the nation’s infrastructure or extending unemployment benefits will lead to roughly $1.60 in economic stimulus for each $1 U.S. spend.

Sanders' amendment calls for stripping out the tax breaks for the wealthiest 2 percent. That money would have instead been spent on deficit reduction and infrastructure needs.

These enormous tax cuts have led to record federal deficits, contributed to the government's current financial woes, and have not helped many Americans who face the greatest financial burdens," Leahy said,
"Assurances at the time to the contrary, the Bush tax cuts failed to ‘trickle down' to help those Americans most in need, while the wealthiest 2 percent of Americans benefited substantially."

Broad, generalized statements make compromises that much harder. Stating "Republicans are not fiscally responsible" is a great example of that.

It is tiring to hear the Chatty Cathy phrase "the Bush years..." Continually stating "the Bush years this" and "the Bush years that" does little to further your cause. In case you have been under a rock the past 2 years, many in the Republican party changed.

There are great fiscal caretakers on both sides of the aisle and also a many number of fat cat spend representatives.

Every administration must play the part of the punching bag. Trying to make this about the other party is a failure.

Government spending is not working. The engine of our country is our workforce. The workforce is in turn driven by small business. Having the government spend to jump start the economy is similar to having someone in cardiac arrest attempt to perform CPR on their own body. Fix the heart.

Also, earth to Klein... We do have a deficit problem, a 14 trillion dollar problem.

Why is this so hard for Ezra and his Journolist fan base to understand? Government spending is already large enough. From now on if you want to spend more money in one area you have to cut it in another. You can not raise taxes. If you think that the country needs stimulus, then you can cut taxes, no more spending sprees. It is very simple.

So then, which Republicans voted against the Bush Tax Cuts and Medicare-D and the Iraq War and doubling the defense budget in 6 years?

Are you aware the national debt doubled under Bush2 and he had unanimous support by congressional Republicans in that marvelous deed?

Are you aware that the last 3 Republican presidents created 82% of the national debt as of the time the Great Recession hit and that most of the current deficits were inherited and are not a result of Obama spending parties?

Are you aware that gvmt spending can indeed stimulate small businesses and that the greatest sources of small business economic activity today are in the capital cities of the 50 states and the District of Columbia where gvmt is seated?

Are you aware that history is replete of examples where depressions or recessions are shortened or ended by gvmt stimulus programs, and in no case has a recession or depression quickly ended by austerity measures?

There is no such thing as a Republican fiscal caretaker. If I am wrong, feel free to make your case instead of speaking in broad, generalized statements.

"In the Clinton era, and then again in the Obama era, congressional Democrats operated under "paygo" rules. Paygo meant, quite simply, that each dollar of spending or tax cuts had to be matched by a dollar of spending cuts or tax increases. They didn't always follow it -- emergency spending, like for the war or the stimulus, didn't fall under paygo, and nor did the extension of the Bush tax cuts -- but generally speaking, they did. "

Does anyone else find the idea of putting almost all spending outside of the rule rather funny?

Where does Obama's 50% expansion of Medicaid in 2 years fall? Because at the end of the Bush Presidency, Medicaid was spending about $200 billion a year. Today, that's $300 billion.

At the close of business on Jan. 20, 2009, according to the bureau, the total debt of the federal government was $10,626,877,048,913.08. On Oct. 15, 2010, the federal government borrowed an additional $58,979,549,154.06, bringing the total federal debt at the close of Friday’s business day to $13,665,926,643,255.96—an increase of $3,039,049,594,342.88 since President Obama’s inauguration.

Let's compare Republicans and Democrats at the state level. Which states are fiscal basket cases: CA, NJ, IL, NY. They have Democrat-controlled legislatures for many years. They are wholly-owned subsidiaries of public employee unions creating the public pension time bombs.

The states in good fiscal shape are invariably controlled by Republican legislaures.

At federal level, the Democrats have created all the programs that are fiscal time bombs: SS, Medicare, Medicaid. Look at projections after 2030, and spending will take up about 40% of GDP on those 3 programs alone under current law.

The Republicans aren't going to be the bill collectors for the Democrats' welfare state. They're going to do whatever they can to make it impossible to sustain it. The Democrats are the drug pushers and the program recipients are the junkies. Why should the Republicans be the bad cops coming in to bust up the high? Let the Democrats take the rap for that.

Being responsible for the deficit is a Democrat con game. Some Republicans are foolish enough to play along, but in the end, Democrats just want Republicans to help them pay for the Democrats' wet dreams on enlarging the welfare state. The Republicans have woken up and wised up that they win more elections at the federal level just starving the beast with tax cuts.

Notice that it's the left-wing wonks like Ezra that get upset at Republicans fiscal irresponsibility at the federal level because Ezra understand the long game.

My question for Ezra: If Republicans agreed to B-S tax increases, would he agree to elimination of Medicaid over 4-year period at federal level and transfer it completely to the states? Is deficit reduction that important to him that he'd agree to that?

Not likely. Which only proves that deficit reduction is just a cudgel for getting Republicans to pay for his welfare state ambitions.

willows1:
"the next thing you know you'll be telling us that the national debt exploded under Ronald Reagan.."

Can you tell us, who controlled Congress when Reagan was President? You know, Congress...that entity where all spending bills originate, have to be voted on, passed by a majority...that sort of thing.

I like how leftists always blame Reagan and Bush, individuals, for all the problems that occurred during their time in office. Yet, when it comes to the problems that occur when a Democrat is in office, it's always someone else's fault. No lie...I just heard a Democrat a few weeks ago say "well, he's just one guy", when asked why they thought Obama hadn't been able to do more to improve the economy by now.

So to intellectually-deficient leftists, one man can be blamed for everything, if that man is a Republican. But if that one man is a Democrat, then it's someone else fault.

To me, I think they are just indirectly admitting Obama's ineptness at leadership, but you can draw your own conclusions.

Between you and me, your post is one of the best I've seen on an Ezra board in some time. B

But please, don't confuse these left-wingers with facts. It really disrupts their talking-point mentality (tax cuts cause deficits, spending growth of 8%-10% a year has nothing to do with it, blah, blah, blah....).

And when they find they have no reasonable basis to argue against your post, they will start calling you names. It gets really ugly. You don't want that....

"Arizona, hobbled by the bursting housing bubble, turned to a real estate deal for relief, essentially selling off several state buildings — including the tower where the governor has her office — for a $735 million upfront payment. But leasing back the buildings over the next 20 years will ultimately cost taxpayers an extra $400 million in interest."
-NY Times, Dec 4 2010, "Mounting Debts by States Stoke Fears of Crisis"
(http://www.nytimes.com/2010/12/05/us/politics/05states.html?_r=4&pagewanted=2&nl=todaysheadlines&emc=a2)

I'm sure you're a Keynesian, and you wouldn't complain about counter-cyclical spending in a recession. So if deficits go up in the middle of a recession due to increases in Medicaid and UI, then that's forgivable, even in TX.

CA has had budget deficits since 2006, before the recession, but I digress.

What's not forgivable are the long-term, unfunded liabilities in the employee pension systems. That's where the Democrats have sold us down the river at the state level. And at the federal level, the long-term liabilities for Medicare, Medicaid, and SS are beyond staggering.

Financial accounting and anticipating the future is not a Democrat strong-point, but the Democrats' policies have dug a deep, deep financial hole for this country that we will sink us in 20 years. Today's deficits are a spit in the bucket.

No Democrat is close to discussing the tax rates that will be required on all income levels to pay for what they've promised under current law for their entitlement program boondogles.

I am responding to this statement you made in your original comment: "The states in good fiscal shape are invariably controlled by Republican legislaures."

I provided evidence that shows that you're painting with too broad a brush, and that it's simply not the case.

Can you explain to me how Texas' budget deficit is an example of counter-cyclical spending?

At the federal level, please explain to me why Republicans, who controlled both houses of Congress and the Presidency from 2001-2006 failed to do anything about long-term debt, and increased it by adding unfunded liabilities such as Medicare Part D.

""the next thing you know you'll be telling us that the national debt exploded under Ronald Reagan.."

Can you tell us, who controlled Congress when Reagan was President? You know, Congress...that entity where all spending bills originate, have to be voted on, passed by a majority...that sort of thing."

For most of the Reagan Presidency (six of the eight years) the Republicans controlled the Senate, even as the Democrats ran the House. So congressional overspending was a bipartisan affliction. And then there's the question of why Reagan didn't exercise his veto more if he was so dedicated to reducing government spending...

You narrowly define fiscal shape in terms of cashflow deficits. I have a broader definition that looks at the balance sheet of the state and federal government. For that you need to look at the present value of long-term promises (liabilities) compared to the present value of expected revenues (assets).

The Republican-controlled states don't have the pension time-bomb problems. It's the public union lapdogs called Democrat legislators that have saddled their states' taxpayers with these fiscal IEDs. You might find a few exceptions, but the general rule is that Republicans are more fiscally responsible at the state level looking at balance sheet health.

At the federal level, the Democrats have likewise done the same with Medicare, Medicaid, and SS. The federal balance sheet has serious negative net worth issues.

It's the spending that ultimately matters. Tell me how Democrats expect to pay for entitlement programs in 2035 when they are 40% of GDP -- not counting defense and all the other functions of the federal goverment? The Democrats are simply not a serious party when it comes to fiscal matters because they have no plan for paying for that level of expenditures short of proposing a UK-style healthcare system, and imposing 50%+ tax rates on the middle class and above.

Medicare Part D is a shameful episode for Republicans, and I'm not here to defend the Republican party. I'm just explaining their behavior. But the Democrats would have spent more than the Republicans did on their prescription drug program. And I don't see Democrats offering to repeal it for the sake of cutting the deficit.

Like I said earlier, the Republicans have no interest in taking electoral heat from Democrats for taking the crack cocaine away from the junkies in the electorate. The Democrats are the fiscal drug pushers. It's their moral and political responsibility to propose cuts in spending, not the Republicans. They created those entitlement programs so let them figure out how to pay for them.

I'm completely in favor of raising taxes under the Bowles-Simpson plan to 21% of GDP. However, what are the Democrats going to offer in return? Would they sacrifice Medicaid for the sake of fiscal responsibility? That would be a minimum price in my mind. Add in agricultural subsidies, the Depts. of Education, Agriculture, and HHS, and then maybe we have the start of a negotiation for truly responsible long-run fiscal responsibility.

Of course, this sort of rules nonsense is nothing new coming from the GOP. I remember their attempt to enshrine the supply-side fairy tale into congressional budget rules by pushing for "dynamic scoring" in which it was to be assumed that tax cuts always pay for themselves with more growth, while government spending never does. You'd think that twenty or thirty years of evidence to the contrary might make an impact, but uh-nuh....

Your argument is basically that "in general" Democrats are not as fiscally responsible as Republicans, EXCEPT in CERTAIN case like Medicare Part D.

Basically you're a partisan that is attempting to justify it by saying you're a partisan because Democrats are fiscally irresponsible, even though you admit that Medicare Part D was embarrassingly irresponsible. I mean, what would Republicans have to do to prove that they are also fiscally irresponsible? Start a war with no end in sight, and finance it using supplemental spending bills that kick the can down the road (like Medicare Part D)?

I'm not arguing that Democrats are more responsible. I am arguing that by and large our leaders are too scared to make the big changes required to balance the budget, long or short term.

My problem is that Republicans like Rep Ryan say they care about long-term entitlements, and then are taken seriously, even though they supported Medicare Part D.

"The Democrats are the fiscal drug pushers. It's their moral and political responsibility to propose cuts in spending, not the Republicans. They created those entitlement programs so let them figure out how to pay for them."

In other words, it's not the Republicans' responsibility to balance the budget. Even though they passed Medicare Part D.

What would it take for Republicans to prove they are fiscally irresponsible?

They would have to offer pension benefits to public employees that are not financed by current contributions. They would have to promise future medical care benefits that 25 years from now that would eventually require 30% of GDP.

They would have to create a pension system that relies on the contibutions of 2.5 workers for every recipient.

The Republicans did support a drug prescription benefit for Medicare. But that would be like comparing the driving record of someone running a red light one time to someone with 3 DUIs and 4 fatalities in 6 accidents.

You need a 2/3 majority to raise taxes, and you've got those insane ballot initiatives that can trump pretty much anything...with such insane rules, it's actually quite shocking the state isn't in much worse shape than it already is.

You're conflating states' issues with federal issues. I'm really not sure what state pensions have to do with Medicare and Medicaid.

Also, what proof do you have that state pensions I'm not sure which exact states you're talking about here because you've up to this point made only vague generalizations) didn't have support by Republicans when they were created? Texas has had Republican state government for years (all branches) and the state pension system still exists.

And if you're asking me whether I'd support taking health care away from our nation's poor children (the largest recipients of Medicaid), then no I wouldn't. But in your view that's the only deal that's allowed I guess. Ag subsidies, NPR, fine. Those programs are a drop in the bucket, though, and you know that.

I think that health care reform is a great idea. I have type 1 diabetes and for me to get insurance, it was a nightmare until I found "Wise Health Insurance" search for them online and you can get affordable health insurance instantly.

Taking out the federal funding eliminates the ease of deficit spending. Moving programs to the state level w/o a Federal Reserve and with balanced budget discipline is a way to alleviate fiscal irresponsibility seen at federal level.

If you're not willing to cut Medicaid, then I guess all you're left with are tax increases with marginal rates in excess of 50%. Unless you've got something up your sleeve for Medicare or SS?

As I suspected, with the left, it's always a dearth of tax revenues. Except for defense, the government is never spending enough!

Gipper, I notice you don't mention Medicare. How about we get rid of that? Except that elderly Republicans love their crack cocaine too, so I guess y'all aren't serious about cutting the deficit either. But I notice you do like to point fingers.

Just one simple question. If tax cut money was to be used by the recipients of those cuts to increase jobs and spur the economy, pray tell what happened with the two huge tax cuts Bush and Republicans supported in toto in 2001 and 2003. We saw no growth, in fact by the time 2006 came around we were in a dizzying spiral downward.

1945-1980-35 years Equitable distribution Income and Wealth, Bottom 20% had greater percent increase than top 20%

1980-2008--Give it to the po rich
3 conservative Presidents
18 years conservative Senate
12 years conservative House
6 years total conservative control

took 600 budget to 3600(less wjc itsy bitsy)
took 1000B debt and added on 9000B
took (carter+clinton)222,000 net new jobs per month and cut to 99,000
Got America into 8 International conflicts.
Had eight years(rr) where more administration employees were convicted of crimes than the grand total since 1900.
Created the Joseph Goebbels Rove Great Lying Machine.
1% went from 20% of Total Financial Wealth to 43%
1% went from 10% total annual income to 24%
1% in 2001-2007 took 66% Income Growth

A few items need to be corrected and some may benefit from a little new knowledge (that isn't really new.

First, no Democrat in the US Congress has ever actually cared about "Paygo". It is merely a talking point for use in Democratic Party re-election campaigns. If they actually cared about balanced budgets, there would be no exceptions for their pet projects. In fairness it should be noted that Republicans couldn't care less about PayGo either. However, when the US Congress was being controlled by the GOP during the Clinton years, the budget did become balanced and went into surplus (on paper). When it did go in to surplus instead of paying down the debt, Congress increased spending again.

The term "paid for" should be banned from use by politicians... all of them. The reason is that nothing has been "paid for" since politicians started robbing the so-called Social Security Trust Fund under LBJ's watch. It is counted and spent as part of the general fund for congresspersons and presidential candidates to pad their re-election resumes. It should be noted that when President Clinton left office the national debt was equal the money spent on Medicaid, WIC, subsidized housing and the rest of the keep-the-poor-poor programs that have been in place since LBJ's regime.

I believe that the author, Mr. Klein, is using the old redirection tactic that the current president has been using since January 2009. Proffering that Republicans are allofasudden concerned about deficits and mocks another nut-cake buzzword (Cutgo) because a Republican thought it up.

The facts are that Democrats have been ignoring Paygo since its inception, except to blather that they are following it (less than truthful) and President Obama has been mouthing this same concern for the deficits since he was sworn in. Yet he pushed hard for spending $787 Billion in stimulus. Then he followed that with the 2009 budget which increased government expenditures 12% across the board. And followed that with this year's Health care Reform with a price tag of over $1000 Billion dollars; and every penny of it is not paid for. In just two years the Democrat controlled congress and the president have not paid for over $3000 Billion in spending. It took President Bush 6 years to overspend that same amount.

I call the money they are obligating "Hope Dollars". They hope: someone will pay it back; voters will forgive them for trying; voters will forget who spent it before the next election; voters will blame it on the GOP (But I'm not so sure they care about paying it back).

Mr. Klein tells us that congress must obligate funds for transportation (road repair, etc.) next year.

I disagree.

Congress and the president covered that arena with the first stimulus package with had plenty of uncompleted highway projects. So there should be only a pittance to get it done. Besides, no one can afford long trips anyway.

Mr. Klein says "It's usually funded by the gas tax. Under cutgo, there's basically no way to do that: You can't offset a spending increase with a tax increase."

I believe you have this wrong. Under CutGO an existing program such as infrastructure maintenance and improvement, could have all of the highway tax dollars spent on it that is taken in and not violate the rule. The problem is exactly the same as the Social Security problem ; the taxes collected are more than needed to support the program, but congress lumps it all into the general fund and spend it all and then some.

"It's not just nuts as a matter of budget arithmetic, but it's nuts in a way that has procedural teeth. That makes compromises that much harder."

Being a partisan has to be tough. Especially when you try to defend their antics. Your guys are saying and doing crazy things, such as Speaker Pelosi's "we have to pass the bill to see what's in it" remark. Did anyone consider reading it first so that you might know what you are doing? I know, it's too hard to read.

And then there is the budget for FY 2011. Did you know that we are three months into FY 2011 and they have not completed their constitutional duty to pass a budget BEFORE the fiscal year begins? By heir actions, I doubt they know it.

And the biggie from way back in 2003: US House ranking Democrat Financial Services Committee member (later to become Chairman), Rep. Barney Frank, said, "These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis,". Then in 2008, he claims credit for a financial system reform bill that may have prevented it: But he voted "no" on it in 2005.

deke4 asks, "what happened with the two huge tax cuts Bush and Republicans supported in toto in 2001 and 2003. We saw no growth, in fact by the time 2006 came around we were in a dizzying spiral downward."

What really happened was we did see growth, all the way until the Democrats took control of congress. Then things started dizzying spiral downward.

From 2001 through 2008:

The average wage went up almost 8% ($32,921.00 up to $41,334.00)

There were either 4.8 or 7.5 million jobs created from 2001-2008 depending on with BLS survey you like (ces v cpa)

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